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|Intelsat Reports Second Quarter 2015 Results|
“Progress on our operational priorities allows us to position for a
return to growth over the long term. We are continuing to leverage
sector innovations that will differentiate our services and enable us to
address new and faster growing applications and vertical markets. In
Spengler continued, “Our expected satellite launches from
Second Quarter 2015 Business Highlights
Network Services comprised 45 percent of Intelsat’s total quarter 2015
revenue, and at
Media comprised 37 percent of the company’s revenue for the quarter
Government comprised 16 percent of our revenue for the quarter ended
Average Fill Rate
Intelsat’s average fill rate on our approximately 2,200 station-kept
transponders was 75 percent at
We have no material changes to our launch schedule since our last
earnings report on
Financial Results for the Three Months ended
Intelsat’s revenues are generated from the provision of On-Network services, or services delivered via our satellite or ground network, and Off-Network services, derived from sales of services sourced from other operators, such as Mobile Satellite Services (“MSS”). Effective first quarter 2015, we expanded our definition of on-network services to include commitments for third-party capacity, generally long-term in nature, that we integrate and market as part of our owned infrastructure. In addition, effective first quarter 2015, certain revenues have been reclassified between transponder services and managed services across our customer sets in order to better reflect the nature of the underlying business.
A supplemental schedule of historical revenues was prepared for the periods 2013-2014 by quarter and full year that reflects the above classification changes. The supplemental schedule is published on Intelsat’s Investor Relations Web site here.
Total On-Network Revenue decreased by
Total Off-Network and Other Revenue decreased by
For the three month period ended
Direct costs of revenue decreased by
Selling, general and administrative expenses increased by
Depreciation and amortization expense increased by
Interest expense, net consists of the gross interest expense we
incur together with gains and losses on interest rate swaps (which
reflect net interest accrued on the interest rate swaps as well as the
change in their fair value), offset by interest income earned and the
amount of interest we capitalize related to assets under construction.
Interest expense, net decreased by
The decrease in interest expense, net was principally due to the following:
The non-cash portion of interest expense, net was
Other income, net decreased by
Provision for income taxes was
EBITDA, Adjusted EBITDA, Net Income, Net Income per Diluted Common Share and Adjusted Net Income per Diluted Common Share
Adjusted EBITDA was
Net income attributable to
Net income per diluted common share attributable to
Adjusted net income per diluted common share attributable to
Free Cash Flow From (Used In) Operations1
Free cash flow used in operations was
Payments for satellites and other property and equipment during the
three months ended
Financial Outlook 2015
Capital Expenditures: We updated capital expenditures ranges to reflect timing differences with respect to certain contractual payments which will result in a shift of capital expenditures from late 2015 to early 2016:
Capital expenditure guidance assumes investment in eleven satellites in the concept, design or manufacturing phase for the three calendar year “Guidance Period” of 2015 through 2017. In addition, two custom payloads are being built for us on third-party satellites, which will not require capital expenditure. Of the eleven satellites in our capital expenditure guidance, we expect to launch one satellite in 2015, four satellites in 2016, and two satellites in 2017, and will continue work on the four remaining satellites for which construction will extend beyond the Guidance Period.
We expect to launch two of our new Intelsat EpicNG high-throughput satellites in 2016, increasing our total transmission capacity. By the conclusion of the Guidance Period in 2017, the net number of transponder equivalents will increase by a compound annual growth rate (CAGR) of 7.5 percent as a result of the satellites entering service during the Guidance Period. The growth also includes capacity from one of the customized payloads noted above, which we expect will be launched in 2016.
Our capital expenditures guidance includes capitalized interest.
Prepayments: During the Guidance Period, we expect to receive significant customer prepayments under our existing customer service contracts.
We expect prepayment ranges of:
The annual classification of capital expenditure and prepayments could be affected by the timing of achievement of contract, satellite manufacturing, launch and other milestones.
Prepayments during the three months ended
Debt Reduction: Based upon the guidance provided above,
Cash Taxes: Expected to be approximately 1.5 percent of revenue for each of the next several years.
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1In this release, financial measures are presented both in
accordance with GAAP and also on a non-GAAP basis. EBITDA, Adjusted
EBITDA, free cash flow from (used in) operations, Adjusted net income
per diluted common share attributable to
Q2 2015 Quarterly Commentary
As previously announced,
Conference Call Information
Participants will have access to a replay of the webcast and conference
Intelsat Safe Harbor Statement:
Statements in this news release and certain oral statements from time to time by representatives of the company constitute "forward-looking statements" that do not directly or exclusively relate to historical facts. When used in this earnings release, the words “may,” “will,” “might,” “should,” “expect,” “plan,” “anticipate,” “project,” “believe,” “estimate,” “predict,” “intend,” “potential,” “outlook,” and “continue,” and the negative of these terms, and other similar expressions are intended to identify forward-looking statements and information. Forward-looking statements include: our plans for satellite launches in the near to mid-term; our guidance regarding our expectations for our revenue performance and Adjusted EBITDA performance in 2015; our capital expenditure and customer prepayment guidance for 2015 and the next several years; our expectations as to the increased number of transponder equivalents on our fleet over the next several years; our expectations as to the level of our cash tax expenses over the next several years; and our debt repayment guidance for 2015.
The forward-looking statements reflect
Because actual results could differ materially from
Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and may not be comparable to similarly titled measures of other companies. Adjusted EBITDA should not be considered as an alternative to operating income or net income, determined in accordance with U.S. GAAP, as an indicator of our operating performance, or as an alternative to cash flows from operating activities, determined in accordance with U.S. GAAP, as an indicator of cash flows, or as a measure of liquidity.
Free cash flow from (used in) operations consists of net cash provided
by operating activities, less payments for satellites and other property
and equipment (including capitalized interest). Free cash flow from
(used in) operations excludes proceeds resulting from settlement of
insurance claims, and is not a measurement of cash flow under GAAP.